NEW DELHI: Reliance Industries is preparing to launch feature phones with 4G capability, creating a new category of mobile devices in India in a bid to attract millions of users to its telecom venture Reliance Jio Infocomm.

These devices could be priced as low as Rs 1,000 and will come bundled with unlimited voice and video calling, besides digital content, people familiar with the plans said. The Mukesh Ambani-owned company will offer the feature phones with Voice over LTE (VoLTE) technology, seeking to win over customers from the rural and tier-3 markets who use phones mainly to make calls.

“Jio wants to tap all the segments in the country and sees huge potential in the rural areas, which it now aims to tap with VoLTE feature phones,” one of the people said, adding that the new devices will be aimed at first-time data users. “The 2G feature phone is still a big market in India.”

About 65% of India’s more than 1 billion mobile phone subscribers still use feature phones. Affordability – the cheapest 4G smartphones cost about Rs 3,000 – and lack of scope for other uses have deterred the faster adoption of smartphones.

Jio, the only telco in India that offers VoLTE to make calls, has added over 25 million users since starting services on September 5 and is targeting 100 million in the shortest time, equivalent to about 38% of market leader Bharti Airtel’s 260 million subscribers in the country.For that, tapping customers who use feature phones is essential, say experts. Currently, VoLTE is offered only on smartphones.

Reliance is developing two feature phones priced at about Rs 1,000 and Rs 1,500 that are likely be launched during January-March, another person said, asking not to be identified. The devices will function just like smartphones and will include the use of data to access the internet and make calls – the only thing missing will be the touchscreen.

“If Jio launches VoLTE feature phones at Rs 1,000, it can potentially shake up the market because the target audience in that segment may prefer to choose phones with free calling inbuilt,” said Navkendar Singh, a senior research manager with International Data Corp.

The 4G telco is working with domestic handset maker Lava International and Chinese original equipment makers to manufacture these feature phones. Jio is said to be subsuming part of the selling price to make the 4G feature phones available at about Rs 1,000 (about $15). The cost of making the phones is about $25 and they are usually sold for about Rs 2,500.

The initial batch of feature phones could have branding from both Jio and Lava and will be sold through their respective retail channels to reach a wider market, the people said.

RIL didn’t respond to emailed queries, while Lava declined to comment on specifics.

Lava Chairman Hari Om Rai told ET that the handset maker is looking to “partner” Jio in its endeavour to empower every citizen of the country. He said the company is evaluating the development of VoLTE feature phones, although he declined to comment specifically on a tying up with Jio for this new handset category.

Reliance won’t be the only company offering such devices. China’s Transsion, which sells the largest number of feature phones in Africa under the Itel brand, plans to introduce 4G feature phones in India by April.

“The platform for this technology is being tested and all the development is happening in China,” said Sudhir Kumar, head of Itel India. “We’re watching Reliance closely, for their model will shape our strategy.”

The VoLTE feature phones will have a keypad, front-facing and rear cameras and will run on the Android operating system. These devices will be equipped with Jio’s content applications such as Jio Chat, Live TV and video on demand. Jio will push its digital wallet service, Jio Money Wallet, through these feature phones.

The capability to make VoLTE calls in these feature phones will be enabled by chipsets, which Jio plans to source from Chinese company Spreadtrum, while talks are on with Qualcomm and Mediatek, people said. Qualcomm, Spreadtrum and Mediatek declined to comment.

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